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CalPERS Forecasts Funding Gap Could Grow to $9.2 Billion in 15 Years

CalPERS Forecasts Funding Gap Could Grow to $9.2 Billion in 15 Years

(Getty Images/Max Whittaker)

Tuesday, 20 September 2016 01:21 PM

 

The United States' largest public pension fund, the California Public Employees' Retirement System (CalPERS), forecast that benefits paid to retirees would outpace projected income by $9.2 billion within 15 years.

The funding gap is projected to widen from about $1.2 billion this year, according to CalPERS.

"This is really a sobering look at what's going on," Board Member Theresa Taylor said during a presentation.

Such warnings have been echoed by public pension funds across the nation, where the costs of aging baby boomers and expensive retirement benefits are growing faster than contributions from current public workers and municipal governments.

Last year, CalPERS' cash flow flipped negative, meaning retiree pension costs were larger than worker contributions and investment income. As a result, the public pension fund has been scrutinizing its investments with an eye toward reducing volatility.

The forecast presented on Monday assumed a 7.5 percent return on investments, a goal that Chief Investment Officer Ted Eliopoulos has warned may not be possible for the $307 billion fund to achieve in coming years.

"We are going to face challenges as a committee and as a staff," said Eliopoulos on Monday. "The path of returns is very consequential here, and we can't predict it."

© 2020 Thomson/Reuters. All rights reserved.


   
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The United States' largest public pension fund, the California Public Employees' Retirement System (CalPERS), forecast that benefits paid to retirees would outpace projected income by $9.2 billion within 15 years.
calpers, funding, gap, retire
202
2016-21-20
Tuesday, 20 September 2016 01:21 PM
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